By John Ward
What will Camerlot do this time?
In a major scoop this morning, Der Spiegel offers up a leaked memo from the German Finance Ministry under Wolfgang Schäuble, in which Germany proposes to demand that the UK should take part in a plan to bail out a Greek return to the Drachma. The Ambrose Evans-Pritchard column in the Daily Telegraph also picks up in the story, with AEP confirming:
‘A finance ministry draft shows that Berlin is preparing a fresh bail-out to stabilise the Greek economy and stem EMU-wide contagion after a return to the drachma, should the country reject EU austerity demands. The funds would come from Europe’s rescue machinery but costs would be shared among all 27 EU members – not just the eurozone – on the grounds that Greece has a right to Brussels crisis funds, like any other member state with its own currency. The scheme aims to contain fallout from a Greek exit and “limit the losses of the European Central Bank” on the country’s bonds.’
While we all need to analyse this latest development with a degree of calm, there are a number of assumptions underpinning the German plan – and it is from Berlin, not Brussels – that must surely now make hitherto neutral observers of the European currency disaster wonder what sort of mentality is in charge in the Government of Frau Doktor Merkel. And if the Dark Knights of Camerlot still can’t see the dragon’s fire, then equally certanly it is time they made way for those who can.
First, the hysterical warnings of Greek-exit Armageddon prompted and guided by Berlin and Brussels in recent months are shown to be not only false, but also something Berlin itself has in the last week begun to rubbish. The cynical nature of these attempts to influence Greek opinion are equalled only by Angela Merkel’s blithely delivered decision to help Nicolas Sarkozy tell the French people which way to vote, and Germany’s leading role (along with France itself) in effectively firing the elected Prime Minister Papandreou of Greece.
Second, Britain having opted out of the euro – and been proved 100% correct in that decision – the Berlin view appears to be that we should now opt in to the cost of failure. That must feel to any reasonable person like an odd (not to say childishly selfish) piece of logic. The permanent European stability mechanism was created to solve eurozone problems, not European Union problems: there already exist other budgets to do that. As Christine Lagarde has spent the last month telling the G20 that the leveraged ESM is more than enough to do the job, she should perhaps explain why Berlin now thinks it isn’t.
The bottom line here is that the Treasury in London is being asked to subsidise the chronic inability of the ESM’s authors to attract donations.
Third, the memo specifically lists “to limit the losses of the European Central Bank” as one of the aims of the Schäuble scheme. The ECB is the euro’s central bank, not ours. We have the Bank of England, our ‘central bank’ for Sterling. It too is suffering huge losses thanks to the euro project. Isn’t it enough that our own sovereign currency is being eroded by the one we told them would end in costly failure?
Fourth, we need to examine precisely how we got to here. Germany and the Nordzone euro countries have bullied Greece into accepting an austerity policy that, one by one, even the most fanatical Friedmanite europhiles have now admitted is an abject failure that made a bad situation ghastly. We are already struggling to get any growth out of our own austerity policy: why should we now bear part of the cost of Teutonic inflexibility?
Fifth, former Italian Prime Minister Prodi among others has recently admitted that grubby deals and back-door political swaps led to the entry of the ClubMeds into the eurozone in the first place. The only thing we can be sure about from reading these accounts of blatant corruption and back-scratching is that the United Kingdom played no part in them whatsoever. But that very venal hypocrisy is responsible almost entirely for the meltdown we are now witnessing. It was slightly exacerbated by foolishly cheap ECB loans (nothing to do with us) and sealed for certain by the insistence of the French that there would be no central fiscal control (also nothing to do with us, and in fact one of our main objections to the future EMU being debated throughout the 1990s).
Sixth, both here and elsewhere, the eye-popping double standards of the Franco-German axis in refusing to release Greece from its arms deal commitments to them (every last deal having in turn involved the world and his mutti being on the take) have shown that, by simple mathematical deduction, without those arms deals there would be no Greek problem. My suggestion is that a simple three-way swap of money and munitions now takes place. And in that circumstance, the UK guarantees not to demand any of the loan interest involved be repatriated to London incurred on bailout costs in the meantime.
There are two questions that both the British and other European nations are now entitled to ask in the light of this quite extraordinary development…always assuming the leaked document turns out to be genuine:
1. Is there really any wriggle-room left for Camerlot now – or are the two Christmas tree clowns at the top of this EU appeasement policy simply going to stick their botties in the air again?
2. To adopt a CM&S/Leveson tone of voice for a second, is Germany a fit and proper country to be leading the EU? That is to say – given its recent belligerence, triumphalism, interference in the affairs of others, demands, evasion of democratic rights, and erosion of Sovereign member liberties – is Berlin merely (as Baroness Thatcher feared twenty years ago) reverting to its long-held historical desire for a Europe united under German hegemony? (While I know full-well this is not the SPD’s aim, the SPD is not in power).
In yesterday’s Westphalian elections, the German electorate pretty firmly rejected the CDU’s crude appeal to ‘thrift’ – and, I suspect, the ridiculously dangerous gamble Chancellor Merkel is taking with German fiscal probity (long a concern of the Frankfurt banking community) by pushing through her soon-to-be creditor-free Fiskal Pakt. Given the hazy East German past of Merkel – and the oft-expressed opinion in Brussels that the whole point of the EU is to keep Germany in its cage – I think it would be an excellent thing for not just Europe, but also Germany, if the good Frau Doktor were to be neutralised by electoral pressure, and Wolfgang Schäuble was pensioned off to run a small regional Landesbank somewhere.
The EU should desert the euro before a desert is all that’s left of Europe. The German political set should eschew the path of dominance before we all wind up eschewing the path of peace. And the Government of the United Kingdom should begin its reversal out of the EU today – before its madness reverses into our economic wellbeing with the force of a thousand denialist experiments.